Bush Economy: Not the Ugliest Girl at the Party

Lawrence Kudlow must be having a hard time finding a date:

Why President Bush seemingly gets no credit for the strong economy is one of the enduring political mysteries of our time. Some call it the “Goldilocks economy” – a term widely used to describe the low-inflation growth of the second half of the 1990s. More accurately, it’s a non-inflationary boom where the economy is hitting on all cylinders and the outlook for the coming years is bright. In view of the ravages of the 2000-02 stock market plunge, the 9/11 terrorist attacks, and skyrocketing energy prices, the Bush boom stands as even more of a great achievement.

Was Goldilocks supposed to be a very attractive woman? With apologies for the sexist analogy, but to suggest that the current economy is like an attractive woman suggests to me that Kudlow has really lowered even his standards. Let’s take a look at what he means by hitting on all cylinders:

Breaking down the major components of the economy, business spending on equipment and software is now contributing close to 30 percent of the increase in gross domestic product … In this supply-side model, it is investment and production that create jobs. Not surprisingly, the total U.S. employment of 142 million workers stands at an all-time high. Since May 2003, non-farm payrolls have grown by 4 million, while the Labor Department’s household survey (which includes the self-employed) has surged by 4.5 million. The unemployment rate is 5 percent with real worker compensation growing by nearly 4 percent.

In 2000, business investment equipment & software represented almost 9.4% of GDP and during last quarter, it represented only 8% of GDP. As far as the household survey measure of employment, the employment to population ratio stands at 62.8% versus 64.4% as of December 2000. And the net increase in non-farm payroll employment since December 2000 is only 1.3 million. As far real compensation – should we be happy that the same health insurance costs our employer so much more?

I guess when you go to the ball in a clown suit, it’s hard to find an attractive date.

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